For facilities placed in service before 1999, figure the amortization deduction for the AMT using ADS (i.e., the straight line method over the facility's class life). For facilities placed in service after 1998, figure the amortization deduction for the AMT under MACRS using the straight line method. Figure the AMT deduction using 100% of the asset's amortizable basis. Do not reduce the corporation's AMT basis by the 20% section 291 adjustment that applied for the regular tax.

Enter the difference between the AMT deduction and the regular tax deduction on line 2b. If the AMT deduction is more than the regular tax deduction, enter the difference as a negative amount.

For the AMT, the regular tax deductions under sections 616(a) and 617(a) are not allowed. Instead, capitalize these costs and amortize them ratably over a 10-year period beginning with the tax year in which the corporation paid or incurred them. The 10-year amortization applies to 100% of the mining development and exploration costs paid or incurred during the tax year. Do not reduce the corporation's AMT basis by the 30% section 291 adjustment that applied for the regular tax.

If the corporation had a loss on property for which mining exploration and development costs have not been fully amortized for the AMT, the AMT deduction is the smaller of (a) the loss allowable for the costs had they remained capitalized or (b) the remaining costs to be amortized for the AMT.

Subtract the AMT deduction from the regular tax deduction. Enter the result on line 2c. If the AMT deduction is more than the regular tax deduction, enter the difference as a negative amount.

For the regular tax, circulation expenditures may be deducted in full when paid or incurred. For the AMT, these expenditures must be capitalized and amortized over 3 years.

If the corporation had a loss on property for which circulation expenditures have not been fully amortized for the AMT, the AMT deduction is the smaller of (a) the loss allowable for the expenditures had they remained capitalized or (b) the remaining expenditures to be amortized for the AMT.

Subtract the AMT deduction from the regular tax deduction. Enter the result on line 2d. If the AMT deduction is more than the regular tax deduction, enter the difference as a negative amount.

If, during the tax year, the corporation disposed of property for which it is making (or previously made) any of the adjustments described on lines 2a through 2d above, refigure the property's adjusted basis for the AMT. Then refigure the gain or loss on the disposition.

The property's adjusted basis for the AMT is its cost minus all applicable depreciation or amortization deductions allowed for the AMT during the current tax year and previous tax years. Subtract this AMT basis from the sales price to get the AMT gain or loss.

Enter the difference between the regular tax gain or loss and the AMT gain or loss. Enter the difference as a negative amount if:

For the AMT, the corporation generally must use the percentage-of-completion method described in section 460(b) to determine the taxable income from any long-term contract (defined in section 460(f)). However, this rule does not apply to any home construction contract (as defined in section 460(e)(6)).

For contracts excepted from the percentage-of-completion method for the regular tax by section 460(e)(1), determine the percentage of completion using the simplified procedures for allocating costs outlined in section 460(b)(3).

Subtract the regular tax income from the AMT income. Enter the difference on line 2f. If the AMT income is less than the regular tax income, enter the difference as a negative amount.

Amounts deposited in these funds (established under section 607 of the Merchant Marine Act of 1936) are not deductible for the AMT. Earnings on these funds must be included in gross income for the AMT. If the corporation deducted these amounts or excluded them from income for the regular tax, add them back on line 2g. See section 56(c)(2) for details.

This deduction is not allowed for the AMT. If the corporation took this deduction for the regular tax, add it back on line 2h.

Refigure all gains and losses reported for the regular tax from tax shelter farm activities by taking into account any AMT adjustments and preferences. Determine the AMT gain or loss using the rules for the regular tax with the following modifications.

Enter on line 2i the difference between the AMT gain or loss and the regular tax gain or loss. Enter the difference as a negative amount if the corporation had:

Refigure all passive activity gains and losses reported for the regular tax by taking into account the corporation's AMT adjustments, preferences, and AMT prior year unallowed losses.

Determine the corporation's AMT passive activity gain or loss using the same rules used for the regular tax. If the corporation is insolvent, see section 58(c)(1).

Disallowed losses of a personal service corporation are suspended until the corporation has income from that (or any other) passive activity or until the passive activity is disposed of (i.e., its passive losses cannot offset “net active income” (defined in section 469(e)(2)(B) or “portfolio income”). Disallowed losses of a closely held corporation that is not a personal service corporation are treated the same except that, in addition, they may be used to offset “net active income.”

Enter on line 2j the difference between the AMT gain or loss and the regular tax gain or loss. Enter the difference as a negative amount if the corporation had:

Refigure gains and losses reported for the regular tax from at-risk activities and partnerships by taking into account the corporation's AMT adjustments and preferences. If the corporation has recomputed losses that must be limited for the AMT (under section 59(h)) by section 465 or section 704(d) or the corporation reported losses for the regular tax from at-risk activities or partnerships that were limited by those sections, figure the difference between the loss limited for the AMT and the loss limited for the regular tax for each applicable at-risk activity or partnership. “Loss limited” means the amount of loss that is not allowable for the year because of the limitation of section 465 or 704(d).

Enter on line 2k the excess of the loss limited for the AMT over the loss limited for the regular tax. If the loss limited for the regular tax is more than the loss limited for the AMT, enter the difference as a negative amount.

Refigure depletion using only income and deductions allowed for the AMT when refiguring the limit based on taxable income from the property under section 613(a) and the limit based on taxable income, with certain adjustments, under section 613A(d)(1). Also, the depletion deduction for mines, wells, and other natural deposits under section 611 is limited to the property's adjusted basis at the end of the year, as refigured for the AMT, unless the corporation is an independent producer or royalty owner claiming percentage depletion for oil and gas wells under section 613A(c). Figure this limit separately for each property. When refiguring the property's adjusted basis, take into account any AMT adjustments the corporation made this year or in previous years that affect basis (other than the current year's depletion). Do not include in the property's adjusted basis any unrecovered costs of depreciable tangible property used to exploit the deposits (e.g., machinery, tools, pipes, etc.).

For iron ore and coal (including lignite), apply the section 291 adjustment before figuring this preference.

Enter on line 2l the difference between the regular tax and the AMT deduction. If the AMT deduction is more than the regular tax deduction, enter the difference as a negative amount.

Enter interest income from specified private activity bonds, reduced by any deduction that would have been allowable if the interest were includible in gross income for the regular tax. Generally, a specified private activity bond is any private activity bond (as defined in section 141) issued after August 7, 1986. See section 57(a)(5) for exceptions and details.

Intangible drilling costs (IDCs) from oil, gas, and geothermal properties are a preference to the extent excess IDCs exceed 65% of the net income from the properties. Figure the preference for all geothermal deposits separately from the preference for all oil and gas properties that are not geothermal deposits.

Excess IDCs are the excess of:

Net income is the gross income the corporation received or accrued from all oil, gas, and geothermal wells minus the deductions allocable to these properties (reduced by the excess IDCs). When refiguring net income, use only income and deductions allowed for the AMT.

Enter the net amount of any other adjustments and preferences, including the following.

Line 4b   

  The following examples illustrate the manner in which line 3 is subtracted from line 4a to get the amount to enter on line 4b.

Example 1.   Corporation A has line 4a ACE of $25,000. If Corporation A has line 3 pre-adjustment AMTI in the amounts shown below, its line 3 and line 4a amounts would be combined as follows to determine the amount to enter on line 4b.

Example 2.   Corporation B has line 4a ACE of $(25,000). If Corporation B has line 3 pre-adjustment AMTI in the amounts shown below, its line 3 and line 4a amounts would be combined as follows to determine the amount to enter on line 4b.

Line 4d.   A potential negative ACE adjustment (i.e., a negative amount on line 4b multiplied by 75%) is allowed as a negative ACE adjustment on line 4e only if the corporation's total increases in AMTI from prior year ACE adjustments exceed its total reductions in AMTI from prior year ACE adjustments (line 4d). The purpose of line 4d is to provide a “running balance” of this limitation amount. As such, the corporation must keep adequate records (e.g., a copy of Form 4626 completed at least through line 5) from year to year (even in years in which it does not owe any AMT).

  Any potential negative ACE adjustment that is not allowed as a negative ACE adjustment in a tax year because of the line 4d limitation may not be used to reduce a positive ACE adjustment in any other tax year. Combine lines 4d and 4e of the 2002 Form 4626 and enter the result on line 4d of the 2003 form, but do not enter less than zero.

Example.   Corporation C, a calendar-year corporation, was incorporated January 1, 1999. Its ACE and pre-adjustment AMTI for 1999 through 2003 were as follows.

  Corporation C subtracts its pre-adjustment AMTI from its ACE in each of the years and then multiplies the result by 75% to get the following potential ACE adjustments for 1999 through 2003.

  Under these facts, Corporation C has the following increases or reductions in AMTI for 1999 through 2003.

Line 8a.   If this Form 4626 is for a member of a controlled group of corporations, subtract $150,000 from the combined AMTI of all members of the controlled group. Divide the result among the members of the group in the same manner as the $40,000 tentative exemption is divided among the members. Enter this member's share on line 8a. The tentative exemption must be divided equally among the members, unless all members consent to a different allocation. See section 1561 for details.

Line 8c.   If this Form 4626 is for a member of a controlled group of corporations, reduce the member's share of the $40,000 tentative exemption by the amount entered on line 8b.

The corporation may elect to use a simplified section 904 limitation to figure its AMTFTC. The corporation must make the election for its first tax year beginning after 1997 for which it claims an AMTFTC. If it does not make the election for that tax year, it may not make the election for a later tax year. Once made, the election applies to all later tax years and may only be revoked with IRS consent.

If the corporation made the election for each of its AMT separate limitations, the corporation uses its separate limitation income or loss that it determined for the regular tax (instead of refiguring the separate limitation income or loss for the AMT, as described earlier).

If a corporation with a net unrealized built-in loss (within the meaning of section 382(h)) undergoes an ownership change (within the meaning of Regulations section 1.56(g)-1(k)(2)), refigure the adjusted basis of each asset of the corporation (immediately after the ownership change). The new adjusted basis of each asset is its proportionate share (based on respective fair market values) of the fair market value of the corporation's assets (determined under section 382(h)) immediately before the ownership change.

To determine if the corporation has a net unrealized built-in loss, use the aggregate adjusted basis of its assets used for figuring its ACE.